1. Insurance Community University www.InsuranceCommunityUniversity.com Insight on Insurance Proposals and Submissions 1

2. Insurance Community University www.InsuranceCommunityUniversity.com Your Instructor Today Casey Roberts, CIC, AFIS, ACSR President, Laurus Insurance Consulting

3. Insurance Community University www.InsuranceCommunityUniversity.com What This Course Will Cover Submissions—The Basics Account Review—Identifying Exposures Structuring Coverage Marketing Applications Proposals Renewals 3

4. Insurance Community University www.InsuranceCommunityUniversity.com Submissions The Basics Standard of Care 4 Based on Regulations To the Insurance Customer To the Insurance Company

5. Insurance Community University www.InsuranceCommunityUniversity.com Basics of Standard of Care Based on Regulations Compliance with such issues as GLBA, Privacy Acts, authority as an agent/broker To the Insurance Company That the submission qualifies for the insurance carrier That you are honest and accurate To the Insurance Customer Ordinary care to obtain the coverages they have requested 5

6. Insurance Community University www.InsuranceCommunityUniversity.com Standard of Care and Submissions The submission for insurance is the culmination of several steps in a process – Acquire the customer – Identify exposures to risk that can be transferred to insurance – Gather all the necessary information For example – Values – Listing of locations 6

7. Insurance Community University www.InsuranceCommunityUniversity.com Applications and Marketing Complete the application Many are sent in incomplete Submit the application to “various” insurance carriers Obtain quotations Choose the right company based on coverages and pricing Check forms for missing items 7

8. Insurance Community University www.InsuranceCommunityUniversity.com Polling Question #1 8

9. Insurance Community University www.InsuranceCommunityUniversity.com Quotations You have submitted applications for your insured to ten insurance companies. Five companies declined and one company’s quotation was significantly less expensive than the other companies. What is the correct method of advising the insured of your marketing results. 9

10. Insurance Community University www.InsuranceCommunityUniversity.com Proposals Accurate and complete Use disclaimers Proposal communicates insurance companies and coverages Customer must sign the proposalChanges to proposal must be initialed 10

11. Insurance Community University www.InsuranceCommunityUniversity.com Polling Question #2 & #3 11

12. Insurance Community University www.InsuranceCommunityUniversity.com Initial Coverage Changes Resubmit to quoting insurance companies Obtain new coverage options and cost Communicate coverage changes and cost customer 12

13. Insurance Community University www.InsuranceCommunityUniversity.com Customer Authorization Obtain permission to bind coverage in writing from the insured Issues binder OR obtain the policy number from the insurance carrier and issue an evidence of insurance 13

14. Insurance Community University www.InsuranceCommunityUniversity.com After Coverage is Bound or Authorized Order coverage If binding and replacing coverage – start cancellation process Suspense for receipt of policy Review policy when received Verify coverage matches EXACTLY what was requested and ordered 14

15. Insurance Community University www.InsuranceCommunityUniversity.com Standard of Care and Submissions Deliver or mail (email) the Include a summary of coverages if that is your procedure Include a letter with the delivery that asks the insured to read their policy and state that the policy provisions supersede all prior documents pertaining to this submission including but not limited to the proposal 15

16. Insurance Community University www.InsuranceCommunityUniversity.com Polling Question #4 16

17. Insurance Community University www.InsuranceCommunityUniversity.com ProposalApplicationBinderPolicySummaryCertificates 17 Match

18. Insurance Community University www.InsuranceCommunityUniversity.com Account Review—Identifying Exposures 18

19. Insurance Community University www.InsuranceCommunityUniversity.com Account Size May Dictate Process Whether small or large premium, all deserve and expect a certain level of service Agent/broker may differentiate based on size of account: small, mid, large – This will differ by agency/brokerage – Procedure manual should specify procedures – All staff should follow 19

20. Insurance Community University www.InsuranceCommunityUniversity.com Account Size May Dictate Process Small Limited Marketing Eligibility Application Cover Letter Mid Size Account Review Coverage Analysis Marketing Proposal Coverage Summary Supporting Documents Large More Detailed More Options More Policies Risk Survey Independent Inspections, etc 20

21. Insurance Community University www.InsuranceCommunityUniversity.com The Case Of The “Small Account” The insured had a small woodworking shop insured with an agent as a “single shot account” (No supporting business) The account was an accommodation because the agency handled the son’s account which was a sizable premium The agent spent a lot of time with the son, reviewing values, going over the renewals 21

22. Insurance Community University www.InsuranceCommunityUniversity.com The Case Of The “Small Account” With the woodworking account the agent just kept renewing it year after year “as is” for THIRTY YEARS The woodworker burned to the ground The policy had been issued on a basic fire form without any inflation guard Result??????? 22

23. Insurance Community University www.InsuranceCommunityUniversity.com Basic Account Review Who, What, Where Locations / Operations Gross Sales/Payroll Current Insurance Missing Coverages 23

24. Insurance Community University www.InsuranceCommunityUniversity.com Polling Question #5 24

25. Insurance Community University www.InsuranceCommunityUniversity.com Larger Account Review Survey Risk Exposures Coverage Checklists Locations Operations Gross Sales/Payroll Flow Charts Of All Facets Of Operations Web Search and Review Review of all supporting contracts 25

26. Insurance Community University www.InsuranceCommunityUniversity.com Survey Risk Exposures & Coverage Checklists Physical Inspection – A Must – Many carriers require for large or small – Survey checklist – Take experts with you Coverage Checklists – By line – Exposure based 26

27. Insurance Community University www.InsuranceCommunityUniversity.com Survey Risk Exposures & Coverage Checklists Coverage Checklist and Recommendations – To reduce oversight – Organized approach 27

28. Insurance Community University www.InsuranceCommunityUniversity.com Locations/Operations-Flow Charts Graphically view account’s operations Assists in identifying: –Geographic exposures Property / Liability Product / Services Employees –Dependency on other businesses –Shipping 28

29. Insurance Community University www.InsuranceCommunityUniversity.com Flow Chart Of All Facets Of The Operation Locations Operations Employees Manufacturing bottlenecks 29

30. Insurance Community University www.InsuranceCommunityUniversity.com Operations Flow Chart Sample 30 Supplies Suppliers Contributors Sub-Contractors Sub-manufacturers Domestic Foreign Method of Transit Truck / Rail Ship / Air Party Responsible For Damage Type of Operation Manufacture Sell Build Recipients of Products or Services Contract Review

31. Insurance Community University www.InsuranceCommunityUniversity.com Relationship with other Entities--Suppliers Supplier HeilindRTD Parts Supplied Electric Switches Motors & Hydraulics Location IndianaChina 31

32. Insurance Community University www.InsuranceCommunityUniversity.com Relations with Customers 32 PistonsSeals/GlandsPiping10% of Sales30% of Sales48% of SalesArizonaPuerto RicoEngland

33. Insurance Community University www.InsuranceCommunityUniversity.com Structuring Coverage Analyze Plan Monitor & Control Identify 33

34. Insurance Community University www.InsuranceCommunityUniversity.com Basis of Structuring Coverage Client information and risk assessment Document review – Vendor agreements – Contracts – Leases Availability of coverage Premium 34

35. Insurance Community University www.InsuranceCommunityUniversity.com Polling Question #6 35

36. Insurance Community University www.InsuranceCommunityUniversity.com Property Submission Basics Location spreadsheet – all locations Address List property to be specifically scheduled Identify property to be blanketed 36

37. Insurance Community University www.InsuranceCommunityUniversity.com Property Submission Basics List buildings; limit requested, deductible, coinsurance, agreed value, valuation (RCV), perils (Special Form, Equipment Breakdown, DIC, etc.), additional coverages such as Utility Damage, Ordinance or Law coverage requirements 37

38. Insurance Community University www.InsuranceCommunityUniversity.com Property Submission Basics Identify additional building items; foundations, pavement, fencing, excavation, underground utilities COPE Year built / # of stories / renovation type and date 38

39. Insurance Community University www.InsuranceCommunityUniversity.com Property Submission Basics Personal Property and Personal Property of Others – Limit requested, deductible, coinsurance, agreed value, valuation (RCV, Selling Price, etc), perils (Special Form, Equipment Breakdown, DIC, etc.).), additional coverages such as Utility Damage 39

40. Insurance Community University www.InsuranceCommunityUniversity.com Property Submission Basics Business Income with Extra Expense (or Extra Expense standalone) – Add to locations spreadsheet – Limit requested, deductible, coinsurance, agreed value, perils (Special Form, Equipment Breakdown, DIC, etc.).), Ordinance or Law Increased Period of Restoration, additional coverages such as Utility Time Element 40

41. Insurance Community University www.InsuranceCommunityUniversity.com Liability Submission Basics Limits of Liability, deductibles (per claim, per loss) or SIR with stop-loss, batch clause language Classifications; premises/operations and products/completed-operations premium basis Include any specifically desired endorsements, such as Additional Insured 41

42. Insurance Community University www.InsuranceCommunityUniversity.com Polling Question #7 42

43. Insurance Community University www.InsuranceCommunityUniversity.com Liability Submission Basics Employee Benefit Liability (unless included with Fiduciary Liability coverage) List all Certificate Holders and Additional Insureds Cross-reference all information to the Excess/Umbrella coverage 43

44. Insurance Community University www.InsuranceCommunityUniversity.com Crime Submission Basics Indicate all crime prevention tools, such as alarms, safe, employee criminal checks information Employee Dishonesty – Benefit plans (check limit or provide separate ERISA coverage) – Include temps, leased, volunteers, partners, managers, etc. 44

45. Insurance Community University www.InsuranceCommunityUniversity.com Crime Submission Basics Money and Securities; Loss Inside and Loss Outside limit Forgery or Alteration Computer Fraud Kidnap and Ransom Insurance – Foreign risk – Blanket all employees – include relatives, guests – Crisis Response coverage 45

46. Insurance Community University www.InsuranceCommunityUniversity.com Polling Question #8 46

47. Insurance Community University www.InsuranceCommunityUniversity.com Directors and Officers Liability Submission Basics Insured prepare and sign application Include entity coverage where appropriate Review type of entity structure (Example: if LLC, verify policy defines positions as managers or managing members) 47

48. Insurance Community University www.InsuranceCommunityUniversity.com Directors and Officers Liability Submission Basics Include audit committee information Pending and prior litigation date concurrent with retroactive date when possible Verify if Claims Made or Claims Made and Reported 48

49. Insurance Community University www.InsuranceCommunityUniversity.com Business Auto Submission Basics List vehicles including year, make, serial number, gross vehicle weight (GVW), cost new, garaging locations, radius of operation and use and coverages desired for each vehicle Include list of filings required if necessary, description of goods transported and loss payees and additional interests 49

50. Insurance Community University www.InsuranceCommunityUniversity.com Business Auto Submission Basics Driver list Verify registered owners of vehicles Add Additional Insureds as needed (such as a leasing company) Liability limits, Symbol 1 or 2, 8, 9 and 19 UM limits (same as liability), Medical Payments limit, Symbol 1 and 8 50

51. Insurance Community University www.InsuranceCommunityUniversity.com Business Auto Submission Basics Physical Damage, Symbol 2 and 8 or 7 and 8 Add PIP or no-fault as needed. If requesting Drive Other Car (DOC) coverage, include list of covered persons (named employee, spouses and resident family members). Be sure DOC includes PIP, UM/UIM comprehensive and collision coverages. 51

52. Insurance Community University www.InsuranceCommunityUniversity.com Business Auto Submission Basics Include Employee Hired Auto Physical Damage coverage Include Fellow Employee coverage 52

53. Insurance Community University www.InsuranceCommunityUniversity.com Workers’ Compensation Submission Basics Estimated payroll by class code Show all known states of operations List all possible states of operations 53

54. Insurance Community University www.InsuranceCommunityUniversity.com Workers’ Compensation Submission Basics Include under 3C ‘all states other than monopolistic or shown in 3A’ – if placing with insurance company unable to comply – use disclaimer to insured on proposal 54

55. Insurance Community University www.InsuranceCommunityUniversity.com Workers’ Compensation Submission Basics If the employer is a corporation and excluding executive officers, indicate % of stock ownership If the employer is a partnership or LLC and including or excluding partners, identify status for each owner and indicate ownership percentage 55

56. Insurance Community University www.InsuranceCommunityUniversity.com Workers’ Compensation Submission Basics Cross reference Employers Liability to Excess/Umbrella coverage Indicate exposures for maritime, USLH, DBA or FELA obligations (separate coverage and/or applications required) Indicate exposures for any known foreign operations or exposures – cross reference to Foreign coverage 56

57. Insurance Community University www.InsuranceCommunityUniversity.com Workers’ Compensation Submission Basics Indicate monopolistic state exposures and provide Stop Gap liability (WC or CGL) – cross-reference to Excess/Umbrella coverage List the employer’s Federal ID number and Unemployment number. Include WCIRB report Experience modification worksheets 57

58. Insurance Community University www.InsuranceCommunityUniversity.com Excess / Umbrella Submission Basics Identify all underlying coverages; insurance companies, premium, deductibles or SIR CGL BAP EBL Stop Gap Identify limits of underlying 58

59. Insurance Community University www.InsuranceCommunityUniversity.com Cyber-coverages Submission Basics Property – All intangible property (data) and locations BI / EE – Triggered by loss of data – website use Liability – Coordinates with CGL to fill coverage gaps Crime – Coordinates with other Crime coverages 59

60. Insurance Community University www.InsuranceCommunityUniversity.com Employment Practices Liability Submission Basics Insured prepare and sign application Identify total number of employees All operation locations Foreign operations 60

61. Insurance Community University www.InsuranceCommunityUniversity.com Employment Practices Liability Submission Basics Obtain Employee Handbook copy (provide privacy letter if needed) Include third-party discrimination and harassment coverage Verify if Claims Made or Claims Made and Reported 61

62. Insurance Community University www.InsuranceCommunityUniversity.com Fiduciary Liability Submission Basics Insured prepare and sign application Identify all plans Determine if coverage includes wrongful acts in administration of plans (EBL coverage) 62

63. Insurance Community University www.InsuranceCommunityUniversity.com Fiduciary Liability Submission Basics Cover all owners, partners, members, managers, directors, officers, committee members, specifically identified trustees, all employees Verify if Claims Made or Claims Made and Reported 63

64. Insurance Community University www.InsuranceCommunityUniversity.com Errors and Omissions Liability Submission Basics Insured prepare and sign application Determine exposures, such as design, consulting, miscellaneous (clearly identify all operations and exposures) Cover all owners, partners, members, managers, directors, officers, all employees, independent contractors Verify type of form and coverage trigger 64

65. Insurance Community University www.InsuranceCommunityUniversity.com Polling Question #9 65

66. Insurance Community University www.InsuranceCommunityUniversity.com Other Coverage Lines – Review And Identify Builder Risk/Installation Floaters (See Construction Checklist) Credit Risk Insurance Difference in Conditions Electronic Data Processing Inland Marine 66

67. Insurance Community University www.InsuranceCommunityUniversity.com Other Coverage Lines – Review And Identify Intellectual Property International Components such as Stock Through Put and Admitted Foreign Insurance Legal Liability Coverage (Property Section) Mobile Equipment or Construction Equipment Floater Ocean Marine 67

68. Insurance Community University www.InsuranceCommunityUniversity.com Other Coverage Lines – Review And Identify Transportation/Motor Truck Cargo Valuable Papers Aviation Garage Liability International/Admitted Foreign Liability Liquor Liability 68

69. Insurance Community University www.InsuranceCommunityUniversity.com Other Coverage Lines – Review And Identify Owners and Contractors Protective Liability Political Risk Pollution Liability Product Recall/Contamination Railroad Protective 69

70. Insurance Community University www.InsuranceCommunityUniversity.com Application & Marketing First to represented / admitted carriers Know your marketplace – Who are the specialists – What will they accept and not accept Size Type Know your company policy forms Know the rules—underwriting manuals 70

71. Insurance Community University www.InsuranceCommunityUniversity.com Application & Marketing Prepare Executive Summary – Synopsis of account for Underwriter – Outline submission attachments, projected premium and need by date 71

72. Insurance Community University www.InsuranceCommunityUniversity.com Market the Account Know Your Market Maintain Declinations Show Companies on Proposal Show Ratings of the Companies Create the marketing file AMS Follow Up 72 Producer / AM Marketing Manager

73. Insurance Community University www.InsuranceCommunityUniversity.com Additional Submission Items Supplemental applications (as required) Financials Statement of Values (SOV) –Signed and dated by insured BI Worksheet –Completed, signed and dated by insured Advertising examples – hard copy, website Leases as required 73

74. Insurance Community University www.InsuranceCommunityUniversity.com Additional Submission Items Copies of any Agent / Broker of Record letters in file Loss runs all coverage lines - 5 years currently valued Loss Summary Copies of final W. C. audits 74

75. Insurance Community University www.InsuranceCommunityUniversity.com Proposals 75

76. Insurance Community University www.InsuranceCommunityUniversity.com Proposal Purpose and Format Standardize the Process Template Used By AllSignature from Customer Coverages Identifies Coverage LinesTerms and Conditions Written Communication New BusinessRenewal 76

77. Insurance Community University www.InsuranceCommunityUniversity.com Proposal Standards Default proposals can be your worst enemy Name and rating of insurance carrier(s) being proposed Policy warranties, such as sprinkler or alarm warranties must be noted on the proposal 77

78. Insurance Community University www.InsuranceCommunityUniversity.com Proposal Standards Recommendation section for additional coverages and higher limits of insurance (EXPLAIN) – ALWAYS offer coverage based on risk identification – NEVER make decisions Appropriate Disclaimer language 78

79. Insurance Community University www.InsuranceCommunityUniversity.com Sample Disclaimer Language The purpose of this insurance proposal is to summarize the insurance program being proposed. It should be used for reference purposes only. Coverages are subject to the terms and conditions as defined in the insurance policy. The proposal in no way changes or interprets insurance policy terms and conditions. The proposal is a quotation of coverage pending receipt of the actual policy and premium. It is not a binder of insurance and is valid only for a period of 60 days from the date of this proposal. 79

80. Insurance Community University www.InsuranceCommunityUniversity.com If the Account Is Not Written Send a thank you letter to the company underwriter whose quote was not accepted Send a thank you letter to the company underwriter who does not wish to quote –Good relationship building If unable to quote send a letter documenting same to the client 80

81. Insurance Community University www.InsuranceCommunityUniversity.com A Word to the Wise on Binders 81

82. Insurance Community University www.InsuranceCommunityUniversity.com Binders A binder is a temporary contract with a maximum and minimum term determined by state law or underwriting instructions Confers full extensions of rights, duties and privileges under the insurance contract being bound 82

83. Insurance Community University www.InsuranceCommunityUniversity.com Binders A binder must have the elements of CATS: – Complete in all respects, both with what is covered and what is not – Accurate in all respects – Timely with respect to inception and expiration date of binder and with respect to jurisdictional limitations on length of binder – Signed by someone with the authority to do so 83

84. Insurance Community University www.InsuranceCommunityUniversity.com Policy Issued 84

85. Insurance Community University www.InsuranceCommunityUniversity.com Key Issues to Review on Policy Checking Correct effective / expiration dates Name Insured appears correctly Name Insured correct – First Named insured – All other entities included or written separately – Inactive entities included 85

86. Insurance Community University www.InsuranceCommunityUniversity.com Key Issues to Review on Policy Checking Locations Limits / Deductibles Endorsements as requested Endorsements added by company Limiting language Warranties Edition dates match proposal and quote 86

87. Insurance Community University www.InsuranceCommunityUniversity.com Summaries of Insurance Used to identify coverages and key issues to the customer, both new and renewal The summary should also indicate that the policies supersede any binders previously issued and that those documents are now null and void Note any differences between requested and issued coverages 87

88. Insurance Community University www.InsuranceCommunityUniversity.com Summaries of Insurance Explain any special exclusions or limitations contained in the policy received There must be disclaimer language on the summary indicating that it does not change any of the terms or conditions of the policy as issued. Customer should sign and date the summary / policy receipt 88

89. Insurance Community University www.InsuranceCommunityUniversity.com Sample Summary Disclaimer Language The purpose of this summary is to recap the insurance program that has been issued for the agency. This summary should be used for reference purposes only as this summary in no way changes nor interprets the terms and conditions of the policy issued. 89

90. Insurance Community University www.InsuranceCommunityUniversity.com Summary Identify, quantify exposures Establish coverage requirements Confirm with customer Ask for coverage correctly Verify that you received what you asked for Document the process and the results 90

91. Insurance Community University www.InsuranceCommunityUniversity.com 91

92. Insurance Community University www.InsuranceCommunityUniversity.com 92 Upcoming CE Classes FREE Community Class 7/12/12Winery Insurance 7/18 & 19Ethics 8/8Equipment Breakdown, Spoilage, Off Premises 7/17 5 Things You Need to Know about Securing your Email and Protecting Privacy for YOU and YOUR clients (Link 7/26 Understanding Logging Industry and Forest Products Mattei Join the Community TODAY at: www.insurancecommunitycenter.com

93. Insurance Community University www.InsuranceCommunityUniversity.com Disclaimer Insurance forms and endorsements vary based on insurance company; changes in edition dates; regulations; court decisions; and state jurisdiction. This instructional materials provided by Insight is intended as a general guideline and any interpretations provided by Insight do not modify or revise insurance policy language. The authors of these materials, Insight Insurance Consultants is a division of Insight Consulting and Management Inc. In providing these materials, Insight assumes neither liability nor responsibility to any person or business with respect to any loss that is alleged to be caused directly or indirectly as a result of the instructional materials provided. Copyright 2010 – 2012 All Rights Reserved www.insurancecommunitycenter.com Laurie: 714.803.5830 laurie@insurancecommunitycenter.comlaurie@insurancecommunitycenter.com Marjorie: 714.206.9583 Marjorie@insurancecommunitycenter.com Marjorie@insurancecommunitycenter.com 93